Meta's Performance Exceeding Expectations Drove Down Stocks

Meta's Third Quarter Results Exceed Expectations

Meta Platforms (META) drew attention with its third-quarter financial results. The company reported $51.24 billion in revenue, marking a 26% year-over-year increase and the highest revenue growth since 2024. These results surpassed analysts' revenue expectations of $49.41 billion, presenting a positive outlook for revenues. However, despite this success, Meta's shares lost value due to the company's one-time tax burden of $15.9 billion and concerns over rising capital expenditures.

Fourth Quarter Forecasts and Increased Expenses

Meta forecasts fourth-quarter revenue to be between $56 billion and $59 billion. This estimate also exceeds the median figure anticipated by analysts, presenting an encouraging outlook. On the other hand, the company raised its total expense forecasts to a range of $116 billion to $118 billion. CEO Mark Zuckerberg indicated that the greater computing power required for artificial intelligence projects has led to increased spending on data centers and cloud services, suggesting that this situation will be profitable in the long run.

Reality Labs and Losses

Meta's Reality Labs division reported a loss of $4.4 billion in the third quarter. This was due to the company not releasing a new VR headset this year and a decrease in consumer demand for its existing products. CFO Susan Li stated that fourth-quarter revenue is expected to be lower compared to the previous year.

Developments and User Growth

In this quarter, Meta reached 3.54 billion daily active users across its apps, surpassing the 3.5 billion user target set by Wall Street. The company's advertising sales also exceeded expectations, reaching $50.08 billion compared to the $48.5 billion anticipated. Investments in artificial intelligence and innovations in this area continue to have a positive impact on the company's performance.

In conclusion, Meta's unexpected tax burdens and increased expenses continue to overshadow its financial success. The question of how it will navigate in future quarters remains a topic of interest.